Quincy DeEarl Caldwell of Katy Texas a stockbroker formerly registered with PlanMember Securities Corporation has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that the stockbroker gave customers bad investment advice concerning mutual funds and had caused them to overpay. Letter of Acceptance Waiver and Consent No. 2018060233501 (Mar. 16, 2020).
According to the AWC, from February of 2014 to September of 2018, one hundred nineteen short-term mutual funds trades had been effected by Caldwell in the accounts of six PlanMember customers. The trades involved Class A mutual fund shares which carried large up-front commissions and that were intended for customers with longer investment horizons. FINRA stated that customers only held the mutual funds for one hundred ten days on average prior to liquidations.
FINRA stated that there were at least twenty-two occasions in which customers were advised by Caldwell to buy Class A mutual fund shares and to then redeem those shares after holding them for only eighty-nine days. Those customers were subsequently told to buy more Class A mutual fund shares that a different mutual fund company had offered. FINRA stated that the bad advice Caldwell provided to customers caused them to incur $57,820.00 in sales charges. Caldwell did not have any adequate foundation to conclude that mutual fund switches and short-term trades were appropriate for customers given the costs of those transactions and the rate in which those transactions were effected. Caldwell violated FINRA Rules 2010 and 2111 in this regard.
Caldwell was registered with PlanMember Securities Corporation between October 7, 2013 and October 19, 2018.